As government increases the scope and stringency of health regulation, providers are turning to litigation to protect their interests. As a result, the courts are becoming interpreters of legislative intent, the enforcers of due process and the ultimate evaluators of regulatory behavior. Unless regulators are attuned to the requirements the courts impose on their actions, decisions are likely to be challenged and overturned, and regulator's ability to control costs may be undermined. We propose to review judicial action affecting capital expenditures regulation and, peripherally, institutional rate regulation. Our objective is to identify court imposed criteria for legally supportable regulation and the factors that contribute to or inhibit adherence to these criteria in the regulatory process. We will achieve this objective through a comprehensive review and analysis of judicial decisions to date and interviews with regulators and other participants in litigation in a sample of states.